HCHS
SPI 6.8 Notes
SPI 6.8 – Match innovators to their industrial and technological contributions (i.e. Rockefeller,
Carnegie, Westinghouse, Pullman, Hershey, Dupont, Bell, Edison, Swift, Armour)
Target – Tell what Carnegie and Rockefeller invented or advanced.
Main Idea - Corruptions could produce goods more efficiently, which allowed the rise of big
business.
Before the Civil War, most manufacturing enterprises were owned by just a few people.
By 1900 big business dominated the economy.
Big business would not have been possible without the corporation.
A corporation is an organization owned by many people but treated by law as though it were a
person.
Main Idea – Business leaders devised new and larger forms of business organizations and new
ways to promote their products.
Many companies organized pools, or agreements to keep prices at a certain level.
By the 1870’s competition had reduced many industries to a few large corporations.
Andrew Carnegie knew he could make a lot of money by investing in the companies that served
the railroad industry.
Carnegie traveled to Europe and he met Henry Bessemer.
Bessemer had invented a new process for making high-quality steel.
Carnegie opened a steel company in 1875 and began using the Bessemer Process.
Carnegie began the vertical integration of the steel industry.
A vertically integrated company owns all of the different businesses on which it depends for its
operation.
The most famous industrialist who achieved almost complete horizontal integration of his
industry was John D. Rockfeller.
Horizontal integration is the combining of firms in the same business into one large corporation.
Rockefeller decided to build oil refineries.
By 1870 his company, Standard Oil, was the nation’s largest oil refiner.
By 1880 the company controlled about 90% of the oil-refining industry in the United States.
When a single company achieves control of an entire market, it becomes a monopoly.
In the late 1800’s many states made it illegal for one company to own stock in another company.
In 1882 Standard Oil formed the first trust.
A trust was a new way of merging business so that it did not violate these new laws.
A trust is a legal arrangement that allows one person to manage another person’s property.
Trustees could control a group of companies as if they were one large, merged company.
New Jersey passed a new general incorporation law that allowed corporations chartered in New
Jersey to own stock in other businesses without any need for special legislative action.
Many companies used the law to create a new organization, the holding company.
A holding company does not produce anything. It owns the stock of companies that do produce
goods.
The holding company manages the companies it owns, merging them into one large enterprise.
The most famous and successful investment banker of the time was John Pierpont Morgan.
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HCHS
IN 1901, J.P. Morgan bought out Andrew Carnegie. Morgan then merged Carnegie Steel with
other large steel companies into an enormous holding company called United States Steel
Company.
U.S. Steel, worth $1.4 billion, was the first billion dollar company in American history.
What techniques did corporations use to consolidate their industries?
Pools, vertical integration, horizontal integration, monopolies, trusts, and holding companies.
In 1877 Bell organized the Bell Telephone Company, which eventually became the American
Telephone and Telegraph Company (AT&T)
Thomas Alva Edison had a laboratory in Menlo Park, New Jersey.
This was the forerunner of the modern research laboratory.
Edison referred to Menlo Park as an “invention factory”.
During the first five years there Edison patented an invention almost every month.
Edison first achieved international fame in 1877 with the invention of the phonograph.
Two years later the light bulb was invented.
His laboratory went on to invent or improve several other devices, including the battery, the
dictaphone, and the motion picture.
An Edison company started supplying electric power to New York City.
In 1889 several Edison companies merged to form the Edison companies merged to form the
Edison General Electric Company.
George Westinghouse invented an air-brake system for railroads.
Westinghouse’s invention provided a continuous braking system, so that all the cars’ brakes were
applied at the same time.
Trains could safely travel at higher speeds.
Thaddeus Lowe invented the ice machine, the basis of the refrigerator.
Gustavus Swift developed the refrigerated railroad car.
Cyrus Field laid a telegraph cable across the Atlantic Ocean in 1866.
This cable provided instant contact between the U.S. and Europe.
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